What is a SWOT Analysis and How to do it

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What is a SWOT Analysis?

The SWOT Analysis requires a series of data that are already available in the company or in the individual as a rule and are discussed in a workshop or during a coaching session for the purpose of the situation analysis.

These are necessary data, which are used for the accompanying self- analysis, competition analysis, market and environment analysis as well as customer analysis.

In the case of self-analysis, they can include special knowledge, know-how, image, customer loyalty or finances. The competition analysis, on the other hand, is designed to gain as much detail as possible about internal strategy, product and service quality as well as payment and delivery conditions.

The market and environmental analysis, in turn, not only examines existing market potentials and attractiveness against the competition but also points to a sociocultural, political and technological environment.

Finally, customer analysis strives to determine the target groups and decision-makers, segments and purchasing factors as precisely as possible. For this reason, all the analyses mentioned can be considered as integral parts of the SWOT analysis.

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The Meaning of SWOT Analysis

The following questions allow a comprehensive analysis of strengths (Strengths), (Weaknesses), (Opportunities) and (Threats), SWOT, an enterprise and an individualized strategy development. Try to look at the points from their own as well as from the outside perspective of the company. This unlocks the view for your considered options to stand out from the competition.

How does a SWOT analysis work?

Strengths – What are your strengths?

  • What are the advantages of your company?
  • What are you better than everyone else?
  • What unique / best resources do you have?
  • Where do others see your strengths?
  • Which factors lead to success?
  • What is the stand-alone feature, the “striking sales argument”?

Weaknesses – Where Do Weaknesses Hide?

  • What could you improve?
  • What should you avoid?
  • What do you expect people from the same area to see your weaknesses?
  • What factors or weaknesses lead to the failure?

Opportunities – What opportunities are there?

  • What good opportunities do you realize?
  • What attention-grabbing trends are you aware of?
  • What is happening in the markets and in the technological field?
  • What changes of law do you directly and to what extent?
  • What influence do social developments have?
  • What local events are of interest and offer you opportunities?

Threats – What are the risks and / or dangers?

  • What obstacles or risks are in the way?
  • What makes the competition?
  • Do quality standards, products or services change?
  • Are changing technologies threatening your position?
  • Do you have debts or other financial problems?
  • Are a serious threat?

Objectives of the SWOT analysis (Key points, strategies)

The SWOT analysis is a simple and useful framework for a strategic analysis of your company’s strengths and weaknesses. The SWOT analysis or analysis of the company reveals opportunities and risks to which you are confronted. It focuses on strengths, minimizes threats, and maximizes the value of the opportunities you have. Use your strengths to take new chances and minimize your weaknesses, risks and dangers.

The SWOT Matrix

Very often, the internal and external company analysis is compared by means of a grid, the so-called SWOT matrix. From the different fields, the matrix, which are affected by different factors, overall strategies for the company can be worked out. The comparison of the results of the SWOT analysis with the results of the environmental analysis within the framework of the SWOT matrix can thus make an important contribution to an intensive discussion of the strategic possibilities for action and necessities. 
Possible strategies that can be derived are as follows:

  • SO Strategy: This is the motto “expand”.
  • WO strategy: Now the company should take care that it can “catch up”.
  • ST Strategy: The Company should “hedge”.
  • WT strategy : Care should be taken to “avoid” these things

When is the SWOT analysis used?

The SWOT analysis is an integral part of every business activity. It is not only carried out before the creation of a business plan. In the successful company, the SWOT analysis provides continuous support and is unthinkable before the introduction of a new product or a new service, before the expansion into new markets or as a regular control of the quality performance.

It is also indispensable in the case of an internal or market-related crisis, which calls for swift and determined responses. In the personal area, the SWOT analysis is used as a helpful tool for preparing for the career or professional reorientation.

Thanks to its versatile applicability, it can be used wherever optimizing pathways are sought.

How to do a SWOT analysis?

In the business sector, the SWOT analysis usually takes place in a small group of two to six people on the management level. In the personal area it can be carried out by an individual with possible support from a coach. Regardless of the specifics of the company or the direction of personal development, it is advisable to carry out the SWOT analysis in four consecutive steps.

First, the internal analysis is carried out, which aims to identify its own strengths and weaknesses. These can result, for example, from existing skills or resources. It is recommended to define the decisive success factors already in the initial phase of the SWOT analysis.

In the next step, the environmental analysis is carried out, which external opportunities and risks can be examined in detail. This is of particular importance for the early detection of changes in direct or further competition.

The data obtained from the first two steps of the SWOT analysis are indispensable for counter-balancing the internal and environmental perspective, which can be done using a four-field matrix .

At the end of the SWOT analysis, concrete strategic options for the company or personal life planning can be derived, which make it possible to make optimal decisions.

Who developed the SWOT analysis?

The SWOT analysis comes originally from the military sector. It was already known in Chinese antiquity and laid the foundation for many Asian martial arts.

As founder of the SWOT analysis, Sunzi (Sun Tzu) can be viewed in this context. This Chinese general, military strategist and philosopher described the cornerstones of the strategy in his book “The Art of War” about 500 BC, which was then intended exclusively for military purposes.

In modern times Machiavelli made an important contribution to the SWOT analysis through his work “The Prince” and Carl von Clausewitz through his unfinished main work “Von Kriege”.

It took a long time before it was developed for application in entrepreneurial competition. It was not until the 1950s and 1960s that various professors at Stanford University (including Albert Humphrey) and Harvard Business School (including Kenneth Andrews) took up the SWOT analysis in the context of the debate on strategic planning.

In 1982, Heinz Weihrich of the University of San Francisco published his famous publication ” The TOWS Matrix – A Tool for Situational Analysis “, which has led many researchers to systematically analyze the situation as the actual creator of the SWOT analysis in the entrepreneurial field becomes.

What is the result of a SWOT analysis?

The SWOT analysis provides a clear picture of the strengths, weaknesses, opportunities and risks of the company or the individual that arise from past and present.

Because it represents the actual situation vis-à-vis the decision-makers, it at the same time provides them with basic options for selecting concrete action options in order to point the future in the desired direction.

In general, the data obtained from the SWOT analysis help to promote internal strengths and reduce weaknesses. They also create the scope for action in which external opportunities can be better exploited and risks can be limited. The SWOT analysis thus provides the necessary knowledge to successfully adapt the optimization of entrepreneurial or personal activities to their own needs and environmental requirements.

What is the goal of the SWOT analysis?

The SWOT analysis is designed to provide a broad overview of the actual situation of the company or the individual. By referring to internal and external factors, it can reveal valuable options for action to help achieve sustainable success.

In the business sector, the SWOT analysis examines possible competitive advantages over the competition as well as new growth potentials that can be exploited in the core business areas.

In addition, it provides support in the development of corporate strategies aimed at meeting ever-increasing customer requirements and addressing growing competition.

However, the SWOT analysis is not only aimed at creating better prospects for the company . It can also encourage decision-makers to act swiftly by drawing attention to existing risks and weaknesses.

In the personal area, on the other hand, the SWOT analysis helps to identify individual talents and abilities, which is of decisive importance for the planning of a career run-up and self-realization.

When is a SWOT analysis useful?

The SWOT analysis is the basis for every business plan because it provides all the necessary data and helps to elaborate the other elements of the business plan as precisely as possible – including the company’s internal objectives, strategy, marketing mix and success monitoring tools.

Numerous examples demonstrate that a thorough SWOT analysis reflects a precise picture of the actual situation and thus can contribute positively to the company’s sustained success. That is why it supports the entrepreneurs at every stage of their efforts to successfully defend themselves against the competition and to secure the expansion of the market position.

In addition to the business sector, the SWOT analysis also seems to be indispensable for the development of a concept for personal development.

In times of economic uncertainty as well as struggle for every job, the SWOT analysis supports both the career starter and the career changer consciously aware of their potential and their points in the discussion talk.

It is therefore just as useful to one’s own life planning, which is supposed to help to achieve greater satisfaction and self-realization, as well as for the company’s internal reflection on growth and progress.

How do I evaluate a SWOT analysis?

The SWOT analysis is evaluated using the SWOT matrix . It is a four-field matrix into which analysis results are transferred. While the internal analysis points to the strengths and weaknesses, the environmental analysis reveals existing opportunities and risks.

The actual situation as well as potential future scenarios can thus be identified and evaluated by weighting the results of the analysis, e.g from a scale of 1 (very weak) to 10 (very strong).

This provides the possibility to obtain additional information about the meaning and priority of individual criteria and influencing factors. Due to different combinations of analysis results, appropriate strategies can be developed and coordinated later.

In the business sector, the analysis of the SWOT analysis is carried out by means of the moderated discussion in the group, in which the individual contents are repeated and the solutions developed jointly.

In the personal area the support of a coach seems to be advisable. In both areas, technical help is provided by uncomplicated Excel templates, which can be adapted to individual requirements.

Which strategies can be derived from the SWOT analysis?

The SWOT analysis provides a solid foundation for further strategies, which are also known as SWOT standard strategies. They are based on the results of the SWOT analysis by showing possible options for action and thus particularly helpful for the strategic planning of the company.

Four basic strategies can be distinguished that combine strengths, weaknesses, opportunities and risks. One option is the Strength-Opportunity-Strategies, which should help to make optimal use of existing opportunities while taking internal strengths into account. They are of great importance, e.g for exploring export and investment potential, which is one of the strengths of the company.

On the other hand, the weakness-opportunity strategies focus on reducing the internal weaknesses in order to exploit new opportunities more efficiently. In this way, they enable flexible action and transform existing risks into opportunities.

Another option is the Strength Risk Strategies, which are designed to take advantage of the internal strengths to balance the dangers of the environment and to influence them to the benefit of the company as much as possible.

The last combination presented the weakness-risk strategies, whose task is to minimize the weaknesses and dangers. This enables the company to identify potential defense options that protect against external risks that may occur due to existing weaknesses.